Australian Mines has announced a proposed settlement with ASIC, following a federal approval process, with the mining company set to make certain admissions of contraventions of its continuous disclosure obligations.
Australian Mines and ASIC will also make a joint submission to the Federal Court that the appropriate penalty is $450,000. Australian Mines will also pay ASIC’s costs in the amount of $55,550.
ASIC commenced the civil penalty proceedings in the Federal Court against Australian Mines Limited for allegedly breaching its continuous disclosure obligations and its Managing Director, Benjamin Bell, for allegedly breaching his directors’ duties.
On 19 February 2018, Australian Mines announced to the ASX that it had entered a term sheet for an offtake agreement with SK Innovation for the expected cobalt and nickel product from Australian Mines’ major asset, the Sconi Project.
ASIC alleges that when Mr Bell presented at mining investment conferences in Hong Kong and London between April and May 2018, he:
- Falsely claimed that Australian Mines had secured funding from SK Innovation for its construction of a plant for the Sconi Project, expected to cost $500 million or more, when in fact no one had offered or agreed such funding,
- Misleadingly stated that the value of the offtake agreement was $5 billion when the terms of the agreement included a potential buyer’s discount of 15 per cent
ASIC further contended that Mr Bell’s $5 billion valuation did not comply with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) and it failed in its obligation to disclose material information to the market. ASIC also contended that Mr Bell failed to discharge his duties as a director with the requisite care and diligence that a reasonable person in his position would have exercised.
ASIC initially seeked declarations that Australian Mines and Mr Bell contravened provisions of the Corporations Act, orders for Australian Mines and Mr Bell to pay pecuniary penalties, and that Mr Bell be disqualified from managing a corporation.
